Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Natus Medical Inc (NASDAQ:NTUS) based on that data.
Is Natus Medical Inc (NASDAQ:NTUS) a good investment now? The smart money is becoming less hopeful. The number of bullish hedge fund bets were cut by 1 lately. Our calculations also showed that NTUS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). NTUS was in 23 hedge funds’ portfolios at the end of the first quarter of 2020. There were 24 hedge funds in our database with NTUS positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to go over the key hedge fund action surrounding Natus Medical Inc (NASDAQ:NTUS).
How are hedge funds trading Natus Medical Inc (NASDAQ:NTUS)?
Heading into the second quarter of 2020, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the fourth quarter of 2019. On the other hand, there were a total of 24 hedge funds with a bullish position in NTUS a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Impax Asset Management, managed by Ian Simm, holds the most valuable position in Natus Medical Inc (NASDAQ:NTUS). Impax Asset Management has a $13.1 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Renaissance Technologies,holding a $12.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism include Ken Fisher’s Fisher Asset Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ric Dillon’s Diamond Hill Capital. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to Natus Medical Inc (NASDAQ:NTUS), around 2.81% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, earmarking 0.41 percent of its 13F equity portfolio to NTUS.
Judging by the fact that Natus Medical Inc (NASDAQ:NTUS) has faced bearish sentiment from the smart money, it’s safe to say that there was a specific group of hedgies who were dropping their entire stakes in the first quarter. At the top of the heap, Israel Englander’s Millennium Management dumped the largest stake of all the hedgies monitored by Insider Monkey, comprising about $4.5 million in stock. J. Daniel Plants’s fund, Voce Capital, also cut its stock, about $3.5 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds in the first quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Natus Medical Inc (NASDAQ:NTUS) but similarly valued. We will take a look at FARO Technologies, Inc. (NASDAQ:FARO), Hollysys Automation Technologies Ltd (NASDAQ:HOLI), Golar LNG Limited (NASDAQ:GLNG), and Unitil Corporation (NYSE:UTL). This group of stocks’ market caps resemble NTUS’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $93 million. That figure was $72 million in NTUS’s case. FARO Technologies, Inc. (NASDAQ:FARO) is the most popular stock in this table. On the other hand Unitil Corporation (NYSE:UTL) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Natus Medical Inc (NASDAQ:NTUS) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. Unfortunately NTUS wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on NTUS were disappointed as the stock returned 0.7% during the second quarter (through June 10th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.